The Crypto Revolution is well under way, whether people realise it or not, cryptocurrencies are gaining more and more traction in the real world. What part will Steemit play in this exciting revolution?
Revolution on a society-wide scale is just something us humans do, that is what sets us apart from our animal cousins, we don't adapt to our surroundings, so much as adapt our surroundings to us.
The Rise Of The Revolution
The most recent global upheaval that we human beings have wrought on our planet, was the Industrial Revolution, there the steam engine made it possible for factories to be located in places that they couldn't when water power was in use. This in turn led to mining on a large scale and of course the invention of the steam train, allowing the easier transportation of heavy goods and later people.
Now we are in the age of the information and that has brought with it the Crypto Revolution, a new way to look at finance, a decentralised currency, free from governmental control, a new way of thinking that is set to change our lives forever, future generations will look back on us as the pioneers of cryptocurrency.
All that being said though, we should bear in mind that the human mind is notoriously bad at estimating the future value of innovation, from NASA believing that they would have moon bases within 40 years of the Apollo 11 landing, to Ken Olsen, founder of Digital Equipment Corporation (an early Compaq company), declaring in 1977, that he couldn't foresee why "anyone would want a computer in their house".
So when you hear statements such as;
“Bitcoin is the future”
and
“cryptocurrency will take over from normal money in twenty years”, it is hard not to raise an eyebrow at the person delivering the statement.
Many times in the past, we have seen predictions of advancements that were going to change our lives forever, remember floating cities, flying cars and nuclear powered vacuum cleaners?
Or maybe you remember the actual inventions of, the Sinclair C5, the TV Watch and the laser disc?
No? Well these amazing innovations were going to revolutionise their respective industries beyond all recognition, however if you're under a certain age you won't even be aware of the existence of any of these things, real or imagined.
Will Bitcoin and its crypto-counterparts fade into history? Become a global currency standard? Or will they simply remain alongside the myriad of centralised, government backed, international currencies we have today; still serving a purpose, still useful, but only to those in the know?
A good indicator of whether an innovation will stick or not, is in the size and enthusiasm of the early uptake of the product. I don't know what the official sales figures for those first laser discs, TV Watches or C5s were, but I bet they weren't great.
Also we must remember that the magic algorithm determining whether something will one day be in wide-spread use does not rely on quality, many a quality product has ended up on the scrapheap of history. Take Toshiba's HD DVDs, they came out first and were a superior product to Sony's Bluray discs, storing almost twice as much information; 15 gig to Sony's 8. Ironically, three decades earlier, Sony's Betamax, video tapes were pushed aside by the lower quality VHS, which became standard until the arrival of DVDs.
Look at compact discs, the early CDs were awful in quality and would scratch in a never-to-be-played-again way, that dismayed many music lovers. However I personally knew people who sold their entire record collections once recordable CDs hit the market and they were the same people that stopped buying them as soon as Mp3s – an even lower quality, type audio recording - became available. That sort of wide-spread enthusiasm meant that CDs and later Mp3 players, were always going to be a hit.
Is Cryptocurrency A Digital Flash In The Pan?
The early uptake of Bitcoin and the subsequent coins that have been created, was and is enthusiastic and unlike the consumers of a physical product like a CD player, participants in digital currencies are contributing to its success in more ways than merely providing industry sales profits.
Each new wave of enthusiasts brings more advancements; in the early days, the developers that were first into Bitcoin were not necessarily thinking of profits. But now that the Crypto Revolution is beginning to draw the attention of the masses, developers are seeing opportunity and where there is opportunity there is usually profit.
Each developmental milestone in cryptocurrency, brings us ever closer to the point when a suburban housewife with little technical know-how, is spending cryptocoin without even thinking about it; but the question is when will that point be?
The advances in cryptocurrency can be put into two main categories; back-end and front-end, a back-end innovation is one that allows the existing users of cryptocurrency to use the system with greater ease and security, but does not directly contribute to the holistic popularity of cryptocurrency.
Back-end innovation, examples would be; vendor payment systems such as BictoinPay or BitPagos, multiple coin wallets such as Coinami, or a triple authentication web wallet like BitGo. These inventions make things more secure and easier to use, but do nothing to promote cryptocurrency on a wider scale.
On the other hand, front-end innovations are advances that make use of back-end innovation to bring the magic of digital currency to the attention of the general population.
There have been a few notable front-end innovations over the past few years that have really attempted to bridge the gap between, the enthusiasts and the general population; however even these advances can be further sub-divided; as either open or closed-loop innovations.
GameCredits is one of the notable closed-loop efforts, ostensibly its a platform designed to help developers easily monetize elements within their games and gamers an easy way to spend money on multiple games without having to change money or enter bank details.
In April of 2016, GameCredits partnered witth ING Software to create the largest online crypto casino, which will also support Occulus Rift and Samsung VR, which may or may not be overkill, only time will tell. (source: https://onlinegames.credit/blog/)
The problem however with closed-loop innovations is because they serve closed-loop niches, the advantages that the innovation brings, never spreads much further than the people who are into that particular niche.
For example; John and Jane from Normalville Ohio, who don't gamble and don't play online games, are unlikely to even hear about GameCredits, much less use them; don't forget that most people, even if they're aware of cryptocurrency, believe that Bitcoin is the only one.
So what is an open-looped, front-end innovation?
Well we can look at something like Shake Pay, which allows the user to pay for anything in a high street store by using their smart phone on the tap and pay contactless payment system, just like they would with a debit or credit card.
This example is clearly open-looped because it doesn't rely on the user being into any particular niche, however it could be argued that Shake Pay is not truly open-looped as it still requires the user to know how to obtain Bitcoin in the first place, so while making Bitcoin easier to use, Shake doesn't make cryptocurrency any easier to understand or even obtain.
Time For Steemit!
The Steemit platform may well be the first open-looped, front-end innovation that doesn't rely on the user's knowledge of digital finance. The plug 'n' play nature of the Steemit platform will attract a lot of users and those users do not have to have any prior knowledge of cryptocurrency or for that matter, Steem Power or any of the other system vagauries.
Whilst I'm sure the average Steemit user's knowledge will increase as they get more accustomed to the platform, they crucially do not have to be tech savvy to join and start earning immediately.
Aha! I hear you cry, by your definition, Steemit is still a closed-loop, front-end innovation, because it is appealing to bloggers and bloggers are a niche.
Yes they are and that's very astute of you for noticing! However the blogging niche is as wide as the human imagination will let it be, there are blogs on just about any subject that has ever popped into the mind of a human being; therefore blogs are the conduit to the masses.
If bloggers start to use Steemit on mass, because they feel they will be instantly rewarded for their efforts, then the word will spread. It will spread through the “manosphere” the “self-helposphere” and just about every sphere of influence you can imagine.
All it takes is for that first; “I made X (insert zeros here) dollars writing on Steemit” article to be mass shared and the people will come.
First the slightly larger group of part-time, semi-serious, semi-professional bloggers will take up the baton, which in turn will spread the word to an even greater audience, then around about the point of initial market saturation, the mass media will get a hold of the story and the masses will be informed.
Add to all that, the fact users don't necessarily have to blog to profit from using Steemit, but rather, to some extent, they can use it in the same way they use Facebook or Twitter to post links, memes, gifs and pictures, then the potential of Steemit begins to show itself.
But wait, stop. We've seen this before haven't we? Bitcoin itself has been through a similar cycle, from a point of obscurity to, stories of incredible riches, sparking mainstream media interest, taking the story to the masses, but all of that hasn't led to wide-spread take up; so what gives?
Well my hypothesis is that back end innovations, either individually or as a group, eventually lead, directly or indirectly to a front end innovation. It is these front-end innovations that lead to mainstream adoption. They are the only types of advances that can drive the revolution forward because those are the ones that are easiest to access by the general public.
For example, let's take the global positioning system (GPS), even after Bill Clinton declared that the system should be dual military and civilian use in 1996. Back-end innovations such as map related websites and in-built, satellite navigation systems for cars, didn't bring the technology to the wider world. It was the portable Sat-Nav systems that brought GPS to the closed-loop, niche of drivers and then later on the open-looped, innovation of smart phones brought it to the world at large.
A lot of observers felt that the first Bitcoin ATM machine in London would see a lot more people taking up Bitcoin than actually did. This is because even though a cash machine seems like a front-end, open-looped, innovation, it isn't, because it simply makes life easier for existing Bitcoin users, without easing the understanding of non-users.
So whilst there have been positive media stories that have tended to prompt price spikes, there hasn't yet been, that all important headline and that headline is;
"Cryptocurrency Now As Easy To Spend As Regular Currency!"
Obtaining cryptocurrency is more complicated than going to a bureau de change or phoning your bank and so ATM machines, whilst a step in the right direction, will remain under-used until an open-looped solution widens the cryptocurrency net.
The power of open-looped solutions to raise the value of cryptocurrency is not in doubt, however I believe the ultimate front end, real-world innovation that will usher in the cryptocurrency age faster than anything yet before it, won't be a software or a hardware product, but rather the ability to pay taxes and municipal bills using cryptocurrency.
This is what gives a currency true power, this was demonstrated in the twelfth century, in medieval Britain when Henry I, brought in the tally stick system, whereby a stick with notches in it could be used to pay taxes. So if you lived back then, one minute, wood was just wood, but then suddenly, certain types of wood had value. (source: https://en.wikipedia.org/wiki/Tally_stick)
Tally sticks were the front-end, open-looped, innovation of the day, coins were scarce in medieval Europe and the concept of the bank note was born, but back then in order to validate your banknote, you needed to be able to read and write, a problem because most of the continent was illiterate.
Therefore tally sticks made money accessible to the most lowly peasant and of course enabled the very same lowly peasant to pay his taxes to the crown.
Just like with King Henry's tally stick, the acceptance of cryptocurrency as a payment standard for taxes and bills by governments and municipalities will bring the technology to the masses and the Crypto Revolution will be said to be truly under way.
The Steemit platform may play an oblique, yet significant influence over this future decision.
Crypto Currency In The New World
In their book; Netocracy: The New Power Elite and Life After Capitalism, the authors, Bard and Soderqvist, with seemingly prescient powers, predict that as we move from a capitalist paradigm, where profit and capital is the prime mover, to an information paradigm, where information and knowledge take the place of capital. Governments will find it harder and harder to collect taxes from corporations as geopolitical jurisdictions in the physical world make less and less sense in light of the, ever-expanding cyberspace of the global online village.
The Netocracy also predicts that tax grey areas, will eventually filter down to small businesses and individuals, as more and more of us start to generate income online. Bard and Soderqvist also opine that new laws will hastily be made as governments thrash and turn, desperately trying to recoup ever diminishing levies.
Over a decade and a half after Bard & Soderqvist originally made these predictions, we are seeing it played out in front of us writ large; companies like Amazon and Google use the blurred lines of internet commerce to pay little or no tax in many of the countries they operate. However we are now also beginning to see the effects of these fuzzy definitions on a smaller scale.
Many affiliate programs and hosting companies are having to charge their clients new taxes as governments hastily redefine tax laws to cover their citizens who are making money via affiliate programs such as Amazon FBA.
So how can Steemit play a part in all of this?
The secret is in Steemit's low barrier to entry, anyone can set up an account within minutes and have Steem Power in their account and start earning Steem Dollars, with the value ultimately being pegged to the US Dollar.
More important than valuation, is that like other cryptocurrencies, Steem Dollars will be able to be exchanged for goods and services online.
This means that somebody who may have heard about cryptocurrency before and was put off by the personal information and confirmations along with the technical know-how they needed to set themselves up with a wallet and an exchange account, can now get started with ease.
Add to that, the fact that many people will be attracted to Steem not because it gives them an in to the world of cryptocurrency, but simply because they've heard they can make money by doing what they're doing on Facebook and other social media platforms.
These two factors; being easy to start and the potential to make money, could well cause Steemit to take off, where others before it have failed and this popularity will eventually attract the attention of governments. They well may decide that taxes can be paid with Steem Dollars, seeing as they may find it hard to tax a currency that they don't officially recognise.
Looking Forward To A Brave New World
This is an important point in the evolving history of cryptocurrency, because at the moment, if I am paid exclusively in digital money, then at some point, I will need to convert at least some of it, into fiat, so that I can deposit it into my bank, withdraw it and pay for stuff that cryptocurrency doesn't cover, like taxes and milk.
However, if I never have to do that, then how can any government tax me if they don't recognise what I'm being paid with, as currency?
Imagine I was a simple fellow and I received all payment for my services in apples, the government wouldn't be able to take 30% of my apples, because apples aren't legal tender and they wouldn't be able to tax me on the value of the apples, because instead of converting the apples to legal tender, I swapped them for stuff and ate them.
Hmm, test case anyone?
So cast your mind into the future if you will, where Steemit has become as big as Facebook is today and millions of people not only earn supplemental income, but their entire incomes on Steemit. Can you really see our governments just ignoring the fact that they have no legal recourse to tax any of these people?
Steemit have created a platform that any member of the public can use and make money on. In the future more back-end innovations will enable those users to spend those Steem Dollars with greater and greater ease on an ever increasing amount of products and services both on and offline.
This means that, Steemit may have just inadvertently created the point in history that future analysts look back on and say; “that was the moment that everything changed”.
If that's the case then the Crypto Revolution, like it's Industrial grandfather before it, may turn out to be Steem powered.
CryptoGee